Jason Mudrick’s goal was clear.

The prospectus for his blank-check company, which he listed on Nasdaq in December, mentioned “distressed” 40 times. Everybody in the industry knows Mudrick Capital Management LP invests in troubled businesses. And a pandemic was raging, so you’d think the list of stumbling firms to choose from would’ve been long for any turnaround specialist.

Instead, Mudrick ended up in baseball cards, which COVID-19 had turned into a booming hobby, by merging his special purpose acquisition company with Topps Co., the iconic cardmaker co-owned by Michael Eisner since 2007.

“Topps is absolutely not distressed at all,” Mudrick said in an interview. “What we sought to do with our SPAC was find a transaction that maximizes shareholder value.”

It’s the perfect encapsulation of the current state of distressed investing -- or lack thereof.

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Money managers have tons of cash they’d like to use to buy troubled companies or invest in defaulted properties and distressed bonds, but there’s surprisingly little trouble in sight.

The shift over the past year is enormous. As pandemic panic gripped markets, the number of corporate bonds trading at prices suggesting distress skyrocketed. A disaster in commercial real estate seemed inevitable. There was a wave of high-profile bankruptcies, including J.C. Penney Co. and Hertz Global Holdings Inc.

About US$1 trillion of bonds and loans in the Americas got to distressed levels. But the Federal Reserve’s swift intervention to save the coronavirus-ravaged economy and keep interest rates low helped drive that below $100 billion.

So more than a year into the Covid-19 era, everything looks upside down to money managers seeking beaten-down investments. Commercial real estate, for instance, has held up despite empty downtowns in major cities, and investors are responding by pouring money into office-tower debt. The number of distressed bonds has dwindled.

Some distressed investors have become so discouraged that they’ve given up and returned money to clients.

That’s not to say distressed specialists who’ve listed SPACs are giving up. Many of them started trading in recent months, when distressed investors already faced an uphill climb. They’re focused on companies that went through bankruptcy last year.

“We’re betting on a rebounding economy after a tough 2020,” Mo Meghji, chief executive officer of a SPAC called M3-Brigade Acquisition II Corp., said in an interview. “The public markets are going to be strong, and companies that have had to become more efficient, change their business models or contend with the pandemic are going to be well-positioned to capitalize on growth.”

SPACs overall, not just those focused on distressed investments, face challenges. They had a gigantic 2020 as their backers raised a record-smashing US$83 billion from investors. Issuance of the entities -- publicly traded corporate shells that are armed with some cash and a mandate to buy a company -- was enormous at the start of 2021, but has slowed over the past month amid investor indigestion and increased U.S. Securities and Exchange Commission scrutiny.

Distressed SPACs are fighting to stand out among the 500 or so SPACs that now trade on U.S. exchanges. The distressed ones need to show they have growth prospects like a technology or health-care firm, said Mitchell Nussbaum, co-chair of Loeb & Loeb LLP’s capital markets and corporate practice. Given signs that investor demand for SPACs is being outpaced by supply, that’s tough.

“It’s mayhem,” he said. “I do expect that you’ll see it tamper down.”

For distressed specialists, part of the appeal is that SPACs significantly lengthen their roster of potential investors since they trade on exchanges just like Apple Inc. or any other stock, meaning virtually anyone can buy them.

“That may be a way for retail investors to play in a space that they otherwise couldn’t play in,” said Madlyn Gleich Primoff, a restructuring partner at Freshfields.

Meghji’s SPAC, which raised US$400 million in March, has already looked at 25 prospective investments, focused on consumer products and renewable energy. His first SPAC merged with IEA Services LLC, a renewable energy infrastructure firm, three years ago. In a world of celebrity-backed SPACs trying to make bold bets that might not pan out, Meghji says his SPAC’s focus on real companies positioned for growth should help.

“Assuming we are at the tail end of the pandemic and the U.S. is going to get vaccinated and herd immunity is going to be in place, we see a huge rebound in the consumer-focused economy,” he said.

Mudrick certainly found growth. Topps increased revenue by 23 per cent in 2020. And the 83-year-old company is trying to learn a new trick by expanding into the hot market for NFTs with digital cards.

He hasn’t given up on distressed investing.

“There’s a lot of post-restructuring companies and companies that are going through a process hoping to emerge shortly,” Mudrick said.

His latest SPAC may not have found distress. And his first -- which merged last year with a gold and silver producer and renamed itself Hycroft Mining Holding Corp. -- has seen its shares tumble. But Mudrick appears ready to try again. He declined to comment, but his firm has mulled listing a third distressed SPAC, according to people with knowledge of the matter.